Understanding the Value of Integrated RFID Systems: A Case Study from Apparel Retail

This contribution is concerned with the business value of RFID
technology in retail. We present a case study of an RFID project at
Galeria Kaufhof, a subsidiary of Metro Group and one of the largest
department store chains in Europe. The project encompasses a variety
of RFID applications at the interface of store logistics and
customer service. The contribution that our study makes to the
literature is threefold. First, we describe an innovative
large-scale trial that goes beyond what was done in earlier projects
in several respects. The most fundamental difference compared to
previous trials is the full integration of RFID event data with POS
and master data, which for the first time offers the retailer the
opportunity to directly observe and analyse physical in-store
processes. Second, the heterogeneity of RFID applications
implemented by Kaufhof allows us to theorize about the effects that
RFID may have on business processes from an IT value perspective. We
develop a conceptual model to explain the different cause-and-effect
chains between RFID investments and their impact on firm
performance, the role of complementary and contextual factors, and
the difficulties in assessing these impacts using objective
performance measures. Third, we compare the case to a prior trial
conducted by Kaufhof about five years earlier. The differences
between the lessons that the company learned in the two projects
illustrates the impact of technological advances and standardization
efforts in recent years on the managerial perceptions of RFID
business value, which allows for the derivation of a number of
useful implications for practice.